FLSA – Labor & Employment Bloghttps://www.steptoelaboremploymentblog.com
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3232DOL Eliminates 80/20 Rule for Tipped Workershttps://www.steptoelaboremploymentblog.com/2018/11/dol-eliminates-80-20-rule-tipped-workers/
Mon, 19 Nov 2018 20:20:02 +0000https://www.steptoelaboremploymentblog.com/?p=2212Continue Reading]]>Earlier this month, the Department of Labor issued an opinion letter ending the “80/20 rule” for whether employers could take a tip credit on employees who performed both tipped and non-tipped work. (FLSA2018-27.) The rule prohibited employers from taking a tip credit on the minimum wage if the employee’s non-tipped work consumed more than 20 percent of the employee’s work. In the opinion letter, the DOL stated that it would not “place a limitation on the amount of duties related to a tip-producing occupation that may be performed, so long as they are performed contemporaneously with direct customer-service duties and all other requirements of the [Fair Labor Standards] Act are met.”

The opinion letter goes on to list several principles it will apply to determine whether a particular duty is part of a tipped occupation. First, The DOL stated that it would consider duties listed as “core or supplemental for the appropriate tip-producing occupation” in O*NET’s Tasks section as “directly related to the tip-producing duties of that occupation.” For example, under the report for food servers, O*NET lists side work tasks such as:

cleaning and setting up tables,

rolling silverware,

sweeping and mopping floors, and

filling salt, pepper, sugar, and condiment containers.

Thus, per the opinion letter, employers can take a tip credit for servers who perform such tasks, even if they spend more than 20% of their time doing so. As the opinion letter explains: “no limit shall be placed on the amount of these duties that may be performed … as long as they are performed contemporaneously with the duties involved direct service to customers or for a reasonable time immediately before or after performing such direct-service duties.”

Second, the DOL stated that “employers may not take a tip credit for time spent performing any tasks not contained in the O*NET task list.” However, the DOL noted that some tasks “not listed in O*NET may be subject to the de minimis rule.”

In withdrawing the 80/20 rule, the DOL cited “confusion and inconsistent application.” Indeed, the 80/20 rule triggered a surge of class action lawsuits from employees claiming they performed too many non-tipped duties for their employer to properly take a tip credit.

Key Takeaway: Although employers no longer need to track the amount of time their tipped employees spend on non-tipped tasks (according to the DOL), employers should still carefully evaluate and periodically audit tipped positions to determine whether they qualify for the tip credit under all of the requirements in 29 USC § 203(t) and the related regulations. Employers must remember that the DOL’s opinion letters do not carry the force of law and thus must continue to monitor state and federal court decisions analyzing the application of the tip credit to ensure compliance. Employers must also continue to consider specific state-law differences that may affect the analysis, particularly in California.

]]>DOL Guidance on FMLA, No-Fault Attendance Policy, and Wellness Screeningshttps://www.steptoelaboremploymentblog.com/2018/08/dol-guidance-fmla-no-fault-attendance-policy-wellness-screenings/
Wed, 29 Aug 2018 16:44:56 +0000https://www.steptoelaboremploymentblog.com/?p=2193Continue Reading]]>On August 28, 2018, the U.S. Department of Labor’s Wage Hour Division issued six new advisory opinion letters offering employers guidance on a range of leave and wage issues under federal law, including the application of the Family Medical Leave Act to organ donors and a no-fault attendance policy.

FMLA Protects Organ Donors

In one letter, the DOL concluded that “organ-donation surgery can qualify as a ‘serious health condition’” under the FMLA, thus entitling the employee to protected leave. The DOL reached this conclusion despite that the employee was in good health before the donation and voluntarily elected to undergo the surgery. The DOL reasoned that organ-donation surgery may require both “inpatient care” or “continuing treatment” and, therefore, meets the regulatory definitions of a serious health condition.

No-Fault Attendance Policy Complies with FMLA

In another letter, the DOL concluded that an employer’s specific no-fault attendance policy did not violate the FMLA. Under the policy, employees accrued points for tardiness and absences, except for certain absences, including FMLA-protected leave. The points remained on an employee’s record for 12 months, and the employer would extend that that period for any time the employee spent not in “active service,” such as during FMLA leave. The employer discharged an employee who accrued 18 points.

The DOL concluded that “freezing” an employee’s attendance points while on FMLA leave did not violate the Act by denying a benefit to the employee who took FMLA leave. The DOL reasoned that the FMLA does not entitle an employee to superior benefits because of FMLA leave, and the attendance policy placed the employee in the same position as if he or she never taken any leave. The DOL cautioned, however, that employers must not treat FMLA leave different from other forms of leave. Thus, the employer must “freeze” an employee’s attendance points for all similar types of leave.

Employers Need Not Pay for Voluntary Participation in Wellness Screenings

In a third letter, the DOL concluded that an employer need not pay employees who voluntarily choose to participate in biometric screenings, wellness activities, and benefit fairs. The DOL emphasized that, in the employer’s program at issue, the program predominately benefited the employee, was wholly optional, and employees did not need to perform any job-related duties during the program.

Guidance on FLSA Overtime and Volunteer Exemptions

The DOL also issued two letters clarifying the application of FLSA overtime exemptions. One letter concluded that the retail-sales exemption applied to employees who sold an internet payment software platform. The second letter concluded that an FLSA exemption for employees working in movie theaters applied equally to a theater that offered in-theater dining.

A third letter concluded that workers who assisted a nonprofit organization with grading a credentials exam qualified as volunteers who did not require compensation.

Background on DOL Opinion Letters

DOL opinion letters allow businesses to ask the DOL for answers to their specific compliance questions under the statutes the DOL enforces. The DOL’s opinion letters do not constitute definitive statements of the law; but the letters signal the DOL’s own interpretation and enforcement priorities, and courts often look to them as persuasive authority on the law. In addition, the letters provide a possible safety net to employers facing similar situations. Employers who rely on DOL opinion letters in good faith sometimes qualify for a defense to alleged violations of federal wage-hour law, even if a court later disagrees with the DOL’s interpretation.

The letters mark one of only a handful of times the DOL has issued letters in the last year. In June 2017, the DOL announced that it would begin re-issuing opinion letters, after the Obama administration eliminated the practice.

The Court noted the Federal Arbitration Act’s strong policy in favor of arbitration, including agreements to arbitrate disputes using individualized rather than class or collective action procedures. The Court rejected the employees’ argument that the FAA’s savings clause creates an exception because the NLRA makes class and collective action waivers for their wage-hour claims illegal. The Court reasoned that the FAA’s exception clause applies only to defenses that apply to “any” contract—not to “defenses that apply only to arbitration” or that “interfere with the fundamental attributes of [traditionally individualized and informal] arbitration.”

The Court then found no clear Congressional intent that the NLRA displace the FAA. The Court noted that if Congress intends to alter the fundamentals of a statutory scheme like the FAA, it will do so expressly; it will not “hide elephants in mouseholes.”

Finally, the Court found no conflict between the NLRA and the FAA, because Section 7 of the NLRA does not encompass class or collective actions. The Court rejected the employees’ argument that the “catchall” phrase at the end of Section 7 “other concerted activities for the purpose of … other mutual aid or protection” includes class and collective actions. The Court noted that the phrase “appears at the end of a detailed list of activities speaking of ‘self-organization,’ ‘form[ing], join[ing], or assist[ing] labor organizations’ and ‘bargain[ing] collectively.’” Thus, the Court reasoned, the catchall phrase must be read to include only conduct “similar in nature” to the subjects that proceed it, and those subjects did not include “courtroom-bound ‘activities’ of class and joint litigation.”

The Supreme Court’s decision may have broader implications for the NLRA given the Court’s narrow interpretation of Section 7’s catch-all phrase.

Employers should revisit their arbitration agreements and determine whether class and collective action waivers make sense for their business. Indeed, such waivers can provide significant risk-mitigation and cost-savings to employers given the thousands of wage-hour class actions filed each year, many of which “unfairly ‘plac[e] pressure on [employers] to settle even unmeritorious claims.'” Please contact us if we can assist in analyzing or drafting such waivers.

]]>Checklist for Workplace Investigations that Survive Litigation Scrutinyhttps://www.steptoelaboremploymentblog.com/2018/05/checklist-workplace-investigations-survive-litigation-scrutiny/
Mon, 14 May 2018 03:57:26 +0000https://www.steptoelaboremploymentblog.com/?p=2172Continue Reading]]>Human Resource and Labor Relations professionals (HR/LR) normally take the lead on workplace investigations of employee misconduct. Given that, they may also bear the blame for investigations that result in adverse employment actions that do not withstand litigation scrutiny. If a current or former employee challenges an adverse employment action via an EEOC or NLRB charge, a DOL complaint, a CBA grievance, or court action, the employer incurs significant expense and disruption simply defending the action. The employer’s exposure increases exponentially if the employer loses the case on the merits before a regulator or court. Consequently, HR/LR should devote sufficient time and attention to workplace investigations to avoid challenge in the first place, where possible, and to ensure the best chance of winning on the merits if a challenge does take place. But where to look for guidance? This blog answers that question and provides a checklist for HR/LR to follow to conduct employee misconduct investigations that will withstand litigation scrutiny.

What’s at stake? Not just discharge investigations

As a threshold matter, HR/LR should not take short cuts when conducting workplace investigations involving non-discharge offenses. We have handled hundreds of expensive EEOC/NLRB/DOL charges challenging progressive discipline, failure to transfer, failure to promote, increased supervision, shift assignments, reduced hours, and pay issues. Thus, HR/LR should test every adverse employment action investigation against the checklist items discussed here, with one basic question in mind: Will this investigation stand up to scrutiny by someone who is skeptical of everything you do?

Who do we focus on?

Recent events, including the #MeToo movement, rightly focus HR/LR on protecting the rights of an accuser, ensuring a timely and effective response, when dealing with employee complaints against co-workers, managers, or third-parties. But when HR/LR professionals think about conducting investigations that will withstand litigation scrutiny, they must focus on the rights of accused. Any reviewing regulator or court will bring that focus to the table given that the accused will become the charging party, complainant, or plaintiff.

What do we focus on?

Should HR/LR focus on the legal elements of the McDonald Douglas or Wright Line burden shifting analysis when analyzing investigation steps and conclusions? No. Instead, HR/LR should focus on principles of basic fairness. If HR/LR ensures that every adverse employment action withstands the “fairness” test, they will significantly reduce the chance that the affected employee will challenge the decision in the first place and will significantly increase the chance that the employer will win if there is a challenge. Indeed, applying basic fairness in the disciplinary investigation process will go a long way to helping your management team establish one of the seven key skills for supervisor success that we cover during our full-day supervisor training programs.

Where do we focus our attention?

Where do we find guidance on what “fairness” means in the workplace context? We look to 100 years of private judicial decisions applying the “Law of the Shop” in the unionized workforce context where every adverse employment decision requires “just cause” to survive litigation scrutiny.

Also note that you must apply “fairness” principles in addition to analyzing investigation mechanics; e.g., who does it (Ops/HR/LR/3p), should it be directed by counsel for the attorney-client privilege, how to message to the alleged wrongdoer during investigation, investigation timing (day of week, time of day), physical location, interview timing, witness order/sequencing, timing for obtaining witness statements, witness instructions (confidentiality), time adjustments for off-duty participants, role/identity of decision maker, audio/video recording, electronic records search, records retention, and interviewee requests for a witness/attorney.

What are the keys to a fair investigation distilled from the “Law of the Shop”?I. Reasonable Rule or Order

Was the policy/supervisor rule or order at issue reasonably related to the orderly, efficient, and safe operation of the business?

Don’t assume! Ask why do we have that rule or why did you give that order? Be able to explain it to the affected employee.

If it is a stated goal or objective, be ready to point out where that goal/objective is found to the affected employee.

If it is not a stated goal or objective, ask Why Not? If an oversight, fix it; update policies/procedures.

If not, ask yourself again whether the rule or order will withstand skeptical scrutiny; it cannot be arbitrary or capricious or lack a clear connection to workplace objectives.

II. Prior notice to affected employee
Notice of rule: Did the employer/supervisor explain the rule, its meaning, it purpose, and application to the affected employee in advance?

An employee can’t be expected to comply (or come into compliance/improve in the progressive discipline context) without notice.

Notice of consequence for failure to follow rule: Did the employer/supervisor explain the likely/potential consequences for not following the rule or order, e.g. next level of discipline?

Notice is a key advantage of a progressive discipline policy.

Is the rule clear, understandable, and understood? Use training/orientation to ensure this factor.

Did the employer communicate the rule in the employee’s first language?

Need evidence of notice, usually through acknowledgement forms (updates too!); remember Steve’s Second Rule of Employment law (if it is not in writing, it does not exist).

Exception: Conduct so egregious that societal norms will establish notice.

III. Timing of Investigation
Did the employer conduct an investigation before making a decision?

Did the employer conduct the investigation in a timely manner (Steve’s 72 hour rule to avoid claims of loss of memory and documentation)?

Delay: degrades reliability of investigation (memories fade, witnesses leave, documents get lost); undermines idea that the employee is not qualified.

Did the employer “stockpile” violations, claiming “this one” broke the camel’s back? Stockpiling is just a form of delay.

Did the employer collect and analyze all relevant evidence before making decision (no rush to judgment)?

No predetermined result! (Check emails! Supervisors are terrible at jumping to conclusions and then putting them in writing before an investigation even starts; if you see that happened, you must correct it in writing).

IV. Thorough Investigation (not just going through the motions; you must protect the right of the accused to a “fair” process)

Did the employer appoint a qualified investigator with responsibility to oversee the entire investigation?

Did the employer collect and analyze all relevant evidence? For example: audio/video recordings, business records (hardcopy and electronic), witness interviews of the accuser, percipient witnesses, the accused, follow up interviews on new/additional information.

Did the employer obtain comprehensive witness statements?

Did the employer investigate with an open mind? i.e., An honest explanation about the purpose of the investigation? Open ended questions? No pressure on witnesses for particular responses?

Did the employer give the accused adequate information to give a meaningful response? i.e., notice to accused of (a) accusations, (b) applicable rule/order, (b) prior notice of rule/order, (c) reason for rule/order, (d) evidence in support of the accusation, (e) reason warranting a potential adverse action, and (f) right to respond.

Did the employer give the accused notice of any new accusations/witnesses?

Did the employer follow up on new information or new witnesses disclosed during investigation?

Did the employer analyze and consider the accused response/explanation?

Did the employer look for exculpatory evidence; i.e., the other side of the coin? Particularly where a second language is at issue or the accused refuses to respond or defend himself/herself.

If not same type of offense, did the employer give the employee notice that it would impose next-level discipline for any additional offense, regardless of type?

Did the employer consider the tenure/seniority of the employee (fairness generally dictates that long-tenured employees get a little extra consideration)?

Were there mitigating circumstances?

Conclusion
Judges and arbitrators have applied various versions of the seven steps of industrial due process described above to answer the “fairness” question for over a hundred years. Sometimes, to see the way forward, we must look back. That maxim applies here for HR/LR professionals who want to protect their businesses from litigation risk.

]]>Supreme Court Rules Car Dealerships Don’t Have To Pay Overtime To Service Advisorshttps://www.steptoelaboremploymentblog.com/2018/04/supreme-court-rules-car-dealerships-dont-pay-overtime-service-advisors/
Mon, 02 Apr 2018 17:43:22 +0000https://www.steptoelaboremploymentblog.com/?p=2151Continue Reading]]>On Monday, April 2, 2018, the Supreme Court of the United States ruled that car dealerships do not have to pay service advisors overtime under federal law. In a 5-4 decision, the Supreme Court held that service advisors, like auto salespersons, partspersons, and mechanics, are exempt from the Fair Labor Standards Act’s overtime requirements.

The case, which reached the Supreme Court for a second time, involved a lawsuit brought by current and former service advisors from a Mercedes-Benz dealership in Encino, California, who claimed they were entitled to overtime pay under the FLSA. The dealership asserted that the service advisors were not entitled to overtime pay under 29 U.S.C. § 213(b)(10)(A), which exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.” The District Court agreed and dismissed the lawsuit.

The Court of Appeals for the Ninth Circuit reversed the District Court. It found the statute ambiguous and the legislative history inconclusive and relied on a 2011 Department of Labor rule that interpreted the term “salesman” not to include service advisors. In finding the 2011 rule defective, the Supreme Court vacated the Ninth Circuit’s decision. On remand, the Ninth Circuit again held that the service advisors were not exempt from overtime pay under the law.

Writing for the majority, Justice Clarence Thomas stated that the “ordinary meaning of ‘salesman’ plainly includes service advisors” as they “sell [customers] services for their vehicle.” Thomas further wrote that service advisors are also “primarily engaged in . . . servicing automobiles.” He added that service advisors are “integral to the servicing process” as they “mee[t] customers; liste[n] to their concerns about their cars; sugges[t] repair and maintenance services; sel[l] new accessories or replacement parts; recor[d] service orders; follo[w] up with customers as the services are performed . . . and explai[n] the repair and maintenance work when customers return for their vehicles.” Chief Justice John Roberts and Justices Anthony Kennedy, Samuel Alito, and Neil Gorsuch joined in the majority opinion.

In a dissenting opinion, Ruth Bader Ginsburg wrote that service advisors “neither sell automobiles nor service vehicles” and, therefore, should not be exempt from overtime under the FLSA. Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan joined the dissent.

This is a huge victory for car dealerships across the country that employ more than 100,000 service advisors.

]]>DOL Reissues 17 Withdrawn Opinion Lettershttps://www.steptoelaboremploymentblog.com/2018/01/dol-reissues-17-withdrawn-opinion-letters/
Wed, 17 Jan 2018 05:02:45 +0000https://www.steptoelaboremploymentblog.com/?p=2121Continue Reading]]>Earlier this month, the Wage and Hour Division of the Department of Labor reissued 17 opinion letters from the Bush administration. The letters provide employers important guidance on a wide-range of issues under the Fair Labor Standards Act.

The reinstatement marks the first publication of opinion letters since the DOL announced last June that it would bring back that form of guidance. The Obama administration had eliminated the practice and withdrawn many existing opinion letters, including many of those reissued this month.

The reinstated letters do not upend any existing laws, but they provide important guidance and a possible safety net to employers facing similar situations. Many of the reinstated letters concerned application of Section 13(a)(1)’s overtime exemption for executive and administrative employees. The letters also discussed whether certain bonuses must be included in the regular rate for purposes of calculating overtime and whether certain on-call time qualified as compensable working hours.

The letters contain a cover letter noting that someone had specifically asked the DOL to reissue that particular opinion letter. Thus, employers who would like to rely on previously withdrawn opinion letters should consider asking the DOL to reissue them under its new policy.

]]>Federal Court of Appeals Cautions Employer Reliance on DOL Opinion Lettershttps://www.steptoelaboremploymentblog.com/2017/11/federal-court-appeals-cautions-employer-reliance-dol-opinion-letters/
Tue, 21 Nov 2017 05:24:43 +0000https://www.steptoelaboremploymentblog.com/?p=2072Continue Reading]]>The Sixth Circuit yesterday outlined narrow circumstances under which an employer can show good faith reliance on a Department of Labor opinion letter in setting wage-hour policy. In Perry v. Randstad General Partner, No. 16-1010 (6th Cir. Nov. 20, 2017), the Court held the employer did not establish a good faith reliance defense despite undisputed evidence that the employer relied on a 2005 DOL opinion letter in determining that its employees met the administrative exemption of the FLSA. The opinion serves as a note of caution to employers relying on DOL opinion letters for wage-hour policies.

The employees at issue in Perry performed various recruiting, staffing management, and sales functions for their temporary staffing agency employer. In classifying those employees as exempt, the employer relied on a 2005 DOL opinion letter finding that staffing managers qualified as exempt under the administrative exemption. The employer thus argued it acted in good faith and thus was not liable under the Portal-to-Portal Act’s protection for employers who take “certain actions on the basis of an interpretation of the law by a government agency, even if the agency’s interpretation later turned out to be wrong.” That defense requires two prongs: (1) the employer acted in conformity with the agency’s opinion, and (2) the employer relied in good faith.

In Perry, the court found the employer’s reliance “was not ‘in conformity with’” the DOL’s letter. The court found that the DOL cited certain facts in its analysis that were not present in this employer’s case. The court noted only two differences between the exempt staffing managers in the opinion letter and the employees at issue: (1) the employees at issue did not have ultimate hiring or firing authority, and (2) the employees at issue did not work with “very little supervision.” (Those differences seem slight in the context of the multi-factored exemption analysis, demonstrating how narrowly the court construed this prong of the good faith defense.)

The court also found that the employer did not act in good faith because the employer knew that its employees’ job duties varied significantly based on factors such as the clients, market, and supervisor. Despite that knowledge, the employer classified all of its employees as exempt nationwide and conducted no individualized analysis.

Key Takeaways: The case presents two important lessons. First, employers must construe DOL opinion letters narrowly when relying on them. Second, employers must conduct individualized analyses before applying exemptions and as part of routine wage-hour audits as discussed here. For employers with nationwide operations, that means conducting a state- or region-wide analysis at a minimum and training in-the-field managers to spot wage-hour issues.

]]>Federal Court Rejects $19.1 Million Wage-Hour Settlementhttps://www.steptoelaboremploymentblog.com/2017/10/federal-court-rejects-19-1-million-wage-hour-settlement/
Thu, 05 Oct 2017 01:21:35 +0000http://www.steptoelaboremploymentblog.com/?p=2059Continue Reading]]>On September 21, 2017, a federal district judge rejected a $19.1 Million proposed deal to end a nationwide wage-hour class action against the TGI Friday’s restaurant chain. In Zorrilla v. Carlson Restaurants Inc., 14-cv-2740 (SDNY), a class of nearly 29,000 tipped workers in nine states alleged violations of the FLSA and state wage-hour laws, including that the restaurant improperly took a tip credit, required an unlawful tip pool, and failed to pay spread-of-hours and uniform-related expenses. After more than four years of litigation, the parties reached perhaps the largest wage-hour settlement for the restaurant industry and sought court approval as required under the FLSA.

The court rejected the settlement agreement without prejudice to renew based on two common wage-hour class action settlement pitfalls: (1) confidentiality provisions, and (2) release and waiver provisions.

The court first rejected the confidentiality provisions because they could be construed to prevent employees and their counsel from discussing the case publicly and the parties did not offer “compelling justifications” for requiring confidentiality. As a general rule, courts rarely approve wage-hour settlements with confidentiality provisions.

The court then rejected the release and waiver provisions as overly broad because they required plaintiffs to waive “discrimination, harassment, retaliation, or hostile work environment claims of any kind,” which have “no relationship to wage-and-hour issues.” The court required the parties to limit the releases “to wage-and-hour claims relating to the existing suit.” Notably, not all courts impose such strict requirements on releases in wage-hour settlements.

On September 28, 2017, plaintiffs filed a revised settlement agreement and request for court approval.

According to the plaintiffs’ motion for settlement approval, the restaurant employed a Rule 68 pick-off strategy early on in the litigation, offering between “$82,000.00 and $2,500.00” to more than 23 proposed named plaintiffs.

Tip credits and tip pooling have proved hot topics for wage-hour class action plaintiffs in recent years and can lead to substantial liability. Employers taking advantage of tip credits should carefully scrub pay policies and practices to ensure compliance, which at a minimum requires proper notice and recordkeeping.

]]>Court Strikes Down DOL Overtime Rulehttps://www.steptoelaboremploymentblog.com/2017/09/court-strikes-dol-overtime-rule/
Sat, 02 Sep 2017 00:54:55 +0000http://www.steptoelaboremploymentblog.com/?p=2041Continue Reading]]>On August 31, a Texas federal court struck down the Obama-era Department of Labor rule that significantly increased the salary threshold for the white collar exemptions to overtime pay. The court temporarily enjoined the rule in November 2016, and this latest ruling makes that decision final (save for an unlikely appeal).

The court ruled that the DOL “does not have the authority to use a salary-level test that will effectively eliminate the duties test” set forth in the Fair Labor Standards Act.

Notably, new Secretary of Labor Alexander Acosta issued a request for information on the DOL’s overtime rules in late July. The request solicited several comments on whether the DOL should update the current $23,660 salary threshold. So while the Texas court’s ruling gives employers some temporary certainty on overtime exemptions, it remains to be seen what the Trump Administration’s DOL will do.

A person may be considered a joint employer in relation to an employee only if such person directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment.”

H.R. 3441 would also define “essential terms and conditions of employment” to include: hiring; firing; determining compensation; assigning schedules, positions, and tasks; day-to-day supervision; and administering discipline. The bill appears to have been introduced in response to recent joint employer decisions arising under the NLRA and FLSA.

Background: You may remember the National Labor Relations Board’s controversial Browning-Ferris decision from August 2015, which expanded the definition of joint employer to include those who possess the right to indirectly control the terms and conditions of employment of another’s employees. Before Browning-Ferris, a company had toactually exercise immediateand direct control over another company’s employees before it would be deemed a joint employer. The Browning-Ferris decision caused companies to reexamine their corporate relationships in a variety of contexts (e.g., user/supplier, parent/subsidiary, franchisor/franchisee, etc.).

Key Takeaway: The law may change in the near future, but for now Browning-Ferris remains controlling, as do the relevant DOL regulations and cases interpreting them. Until H.R. 3441 or a similar proposed bill becomes law, companies should continue to think carefully before entering into contracts that reserve the right to directly or indirectly control another company’s employees. If H.R. 3441 becomes law, companies will have greater leeway to retain limited control without assuming joint employer obligations and liabilities.